Global accounting reform ups pressure on U.S. to sign up

LONDON (Reuters) - Plans by the accounting body responsible for global standards to make itself more answerable to the public will put pressure on the United States to sign up or risk losing influence.

The International Accounting Standards Board (IASB) has drawn up the standards, which are used by listed companies in over 100 countries, including the European Union.

So far the United States has delayed its decision to sign up, under pressure from companies and Congress who say they do not want to cede regulatory sovereignty to a London-based body.

But Thursday’s publication by the IASB’s Trustees and Monitoring Board of plans to make themselves more open and accountable in their second decade may push the United States to think again, given the far-reaching impact that accounting rules have on financial markets and investors.

G20 leaders want a single set of global accounting standards to improve transparency for investors and regulators, starting with “convergence” or alignment of IASB and U.S. rules.

A source involved in drawing up the Monitoring Board blueprint said the intention was to put pressure on the United States to say quickly and clearly when it will adopt IASB rules.

The IASB’s Monitoring Board also said that in future it would only accept members from countries that use IASB rules and set January 2013 as the date for its first eligibility assessment.

Nigel Sleigh-Johnson, head of financial reporting at global accounting body ICAEW, said the plans assumed the United States will adopt IASB rules.

“It is a major step for the United States to take but it is one that we think would benefit investors greatly not just in the U.S. but around the world,” Sleigh-Johnson said.

In a separate strategy paper to set a framework for the IASB’s second decade, the Trustees agreed that failure to commit to adopting its rules “in some form” could lead to changes in the way Trustee and IASB seats are distributed geographically.

Four Americans have seats on the IASB board, with Americans also among the Trustees. The U.S. Securities and Exchange Commission is on the Monitoring Board and signed off on the new blueprint.

Not having a strong voice at the IASB could be damaging for the United States as the SEC probably has more companies filing statements to it under international rules than some countries that have adopted IASB standards outright.

The SEC also allows foreign companies with a U.S. listing to file under IASB rules. In particular, over 100 companies from Canada are listed in the United States and file statements there using IASB rules.

In a bid to mollify U.S. critics, the blueprints put heavy emphasis on cracking down on “carve outs” whereby countries or regions introduce exemptions from some IASB rules.

U.S. policymakers have pointed to carve outs as evidence the IASB rules cannot be truly global as world leaders want.